Battery raw materials market update February 2025

Key points

1. Will restocking emerge?
   Market waiting to see whether restocking emerges after the Chinese Lunar New Year holiday, given rebound in European EVs and ongoing strong energy storage systems (ESS) market, this may well happen.

2. Higher prices trending in spodumene market
   Spodumene prices have trended higher to the extent they are now squeezing Chinese convertors’ margins. Will this halt spodumene price rises, or lift lithium salt prices?  

3. Strong EV sales data in Europe with rebound expected
   EVs sales in Europe are expected to rebound in 2025, with some very strong EV sales data for January emerging, like BEV sales in Germany up 53.5% and up 41.6% in the UK. This will be a relief to the lithium industry, as Europe was one of the weak spots last year. This should also be good for lithium hydroxide demand, as European EVs tend to favour NCM lithium-ion batteries. But the question is, will this be countered by less appetite for EVs in the US? 

What do our analysts say?

The lithium market suffered from oversupply in 2024, as well as weaker than expected demand, so the market has been waiting for demand to catch-up. Demand from ESS grew strongly last year and that is expected to continue this year. Early signs, plus our expectations, are for a stronger EV market in Europe this year, with continued strength seen in China. The return to strength in Europe may be enough to swing the tide in the lithium market and price.

Will Adams, Fastmarkets

Key points

1. Will cobalt demand pickup after the Lunar New Year?
   The cobalt market is eagerly awaiting the reopening of the Chinese market post-Lunar New Year holidays to see what level of demand pickup there is heading into the Spring.
   

2. Oversupply in cobalt intermediates market continues
   A significant improvement in metal and cobalt salt demand is expected to be required in the coming months given the continued oversupply of cobalt intermediates in the market from the DRC and Indonesia.

What do our analysts say?

The return of China’s manufacturing and pCAM industries this week will be keenly watched by stakeholders in the cobalt value chain. At this stage we are not expecting a significant price correction given the oversupplied nature of the market from intermediates to cobalt metal. CMOC’s guidance for 2025 set at 100-120kt of cobalt suggests we’re in for another bearish year for the market. In the US, the potential tariffs on Canadian cobalt metal could see short-term tightening on certain Western brands, however, we’re not holding out for a strong recovery in standard-grade cobalt metal pricing for the rest of the year.

Rob Searle, Fastmarkets

Key points

1. LME nickel cash prices remains largely unchanged
   The LME nickel cash price was little changed in January, trading in a US$15,000-16,000/tonne range. By the end of the month, the nickel price was down by 0.4% at $15,040/tonne.

2. Why did the LME nickel price remain low?
   With the market oversupplied there was little impetus to push the price higher and so the LME nickel price remained below $16,000 per tonne, which had been a strong support level for most of 2024.

3. Supply response from Indonesia unlikely
   Reports that Indonesia would lower its ore mining quota for 2025 were not taken seriously by the market, with neither the nickel price nor ore prices picking up. The latest reports indicate that the ore mining quota for 2025 will be higher than in 2024, suggesting that despite the market’s oversupplied fundamentals, a supply response from Indonesia is unlikely.
   

What do our analysts say?

The nickel price remains under pressure, continuing the trend seen throughout 2024, which followed a sharp fall in 2023. With little prospect of the market rebalancing soon, any prospects of a sustained upside to the price, will require additional production cuts, or stronger-then-expected consumption growth.

Olivier Masson, Fastmarkets

Key points

1. Bearish prices in battery-grade manganese sulfate market 
   The Chinese battery-grade manganese sulfate market saw bearish prices once again in January with limited restocking and a slowdown in business activity leading up to the Lunar New Year holidays in the region.
   

2. General trend of declining demand and prices 
   Prices averaged 5,700 yuan per tonne, down 10% year on year. Despite some bullish price movement in the middle of 2024 on tighter ore availability in China, the general trend for the manganese sulfate market has been that of declining demand and prices over the last 12 months.
   

3. Chinese operating rates remain low
   Operating rates remain low in China around 30-40% with this price level for manganese sulfate still uneconomical for several non-integrated and higher-cost producers.
   

What do our analysts say?

We await to see what kind of recovery and restart there is in the NCM pCAM and CAM sectors in China post-holiday. Fastmarkets’ view is for a recovery in buying from the midstream to support pricing. Combine this with the need to restock material given the destocking we’ve seen over the last 12 months and we’re hopeful for supported prices this year. But as price rises, previously closed processors in China will be incentivised to re-enter the market, capping any potential bull run.

Rob Searle, Fastmarkets

Key points

1. Fine flake graphite prices reach new low
   In January, fine flake graphite prices in China reached their lowest level since 2020, falling to an average of $435 per tonne, which is 47% lower than their peak values in 2022. Synthetic graphite took significant market share in the battery space and sufficient supply of fine flakes in China has kept prices under pressure.
   

2. Are synthetic anode prices set to improve? 
   Green petroleum coke prices continued to climb and were 30% higher year-on-year in January, which could be the initial signal for long awaited improvement of synthetic anode prices, following a year of severe price competition between Chinese anode producers.
   

3. US graphite producers seeking tariffs on Chinese anode imports
   The US International Trade Commission gave a greenlight for the antidumping and countervailing investigation on imports of active anode material from China to the US. North American graphite producers are seeking tariffs as high as 920% on Chinese anode imports. There is already 25% tariff in place on active anode material from China under the Section 301.

What do our analysts say?

The new antidumping and countervailing duty investigation on active anode imports from China demonstrates that the anode production is the most challenging part of the battery supply chain for the US to compete with China. The existing 25% tariff have had limited impact on anode imports from China, demonstrating that currently Chinese anode makers remain the cornerstone of global anode supply chains.

Georgi Georgiev, Fastmarkets

Key points

1. India supercharges battery recycling with duty-free imports of scrap and black mass
   In the short term, this move will lower cost barriers for domestic recyclers, boosting imports of both black mass and scrap batteries. Fastmarkets expects 50,000 tonnes of black mass refining capacity in India in 2025 increasing to 200,000 tonnes by 2035 and with this move we expect a positive impact on these numbers. 

2. Production scrap still the main feedstock for the next five years
   With demand growth for EVs slowing down and battery lifetimes longer than expected, production scrap will continue to be the primary feedstock for battery recyclers. Fastmarkets expects production scrap to be the primary source of these critical battery materials until 2030. With this mindset, Li-Cycle’s OEM Germany deal, and ACE Green’s Africa partnership secure vital feedstock for their battery recycling operations. 

What do our analysts say?

India’s move on duty-free imports of scrap and black mass aligns with the progress the country is making toward building a mature battery recycling infrastructure – first by establishing regulations to guide recycling targets since 2022 and now by eliminating import duties on scrap. In the short term, this move will lower cost barriers for domestic recyclers, boosting imports of both black mass and scrap batteries, positioning India as a major global player in battery recycling for the coming years.

Andre Cortesao, Fastmarkets

Key points

1. Pause in tariffs for Mexico and Canada
   Trump’s tariffs on Mexico and Canada have been paused following threats of retaliatory tariffs and discussions with the nation’s leaders. These would have significantly impacted demand for vehicles from companies importing into the US from the two countries, so the rescinding of these tariffs will be welcomed by consumers and OEMs like VW. Tariffs on China remain however, and the announced retaliatory tariffs on more critical minerals do not bode well for the semiconductor industry, which is an increasingly key cost to making electric vehicles. 

2. Ford to build EREVs despite setbacks to US-related EV policies
   Ford’s announcement to build and sell extended ranged EVs (EREV) into the US market should come as little surprise, as despite setbacks to US-related policies, the design of an EREV suits the US market best of all due to its preference for large vehicles and range requirements.
   

3. Why is Tesla’s leadership position in EV sales slipping?
   Preliminary January sales for Tesla indicate that its leadership position within EV sales could be slipping due to a combination of an ageing model lineup and its deteriorating brand image within Europe, as it also loses ground in the Chinese market. Tesla’s EV sales in January fell 63% year-over-year in France, 44% and 38% in Sweden and Norway respectively, totalling just 55% of last year’s deliveries in major European countries. 

What do our analysts say?

Tesla’s continued sales decline would slow the overall EV transition after what were slow years in Europe and the US. While most demand will likely shift towards other companies, offering slight respite for incumbent OEMs, some of this will be lost to hybrids and traditional ICE vehicles.

Connor Watts, Fastmarkets